 module 26 static and dynamic aspects of demand in agricultural economics whenever we make discussion about demand for agricultural products, static demand and dynamic demand play an important role. In fact, when we talk about the demand of agricultural commodities, if our movement with reference to demand for agricultural commodities is along the curve then it is basically understanding of the demand under static site. In fact, static aspects of the demand refers to instantaneous adjustment in demand because of change in price of the commodity. So this change in quantity demand that we observe immediately because of change in price it is called as static aspects of the demand. Under static aspects of the demand, other things that can affect the demand remains constant. If we talk about any consumer whose demand for wheat there are certain factors that play some important role among those factors price of substitute, price of compliment and income of the consumer has also some role in the determination of the demand. But under static aspects we keep all these factors constant there is no there is no change in income, no change in price of compliment, no change in price of substitute only there is change in demand because of change in price of that particular commodity. But when we make discussion about the dynamic aspects it refers to change in demand that is associated with factors other than the price of that particular commodity. It involves a longer time period it might be possible because of there is some change in factors other than price and because of that change in factors other than price of the commodity there is some change in demand. It requires a long it requires relatively a longer time period and at the same time because of change in these factors there is also some change in association between price and quantity demand for that particular commodity. So under dynamic side we will consider the time horizon in the determination of demand for that particular commodity. In that horizon consumer's income will change it might be possible there is some change in price of compliment, and because of all these changes there is some change in association between price and quantity demand. In fact when demand shifts from one position to another position it is called as change in demand and it associates with dynamic side of the demand. Whenever we make discussion about change in demand there are certain factors that causes change in demand among those factors demographic factors play some role. Demographic factors relates with the usually describe the population characteristics of the population. So in the determination of the demand all these factors play some role. It might be possible if there is increase in young people over a period of time after a certain time period pose in a particular country is increasing because of that increase in young people there is some change in the demand pattern of the demand of a commodity in the market. Then in the same way there are some economic factors that change the demand. Economic factors will include consumer's income, price of substitutes, price of compliment. For example if I talk in the reference of wheat it might be possible in a particular region people are meeting their demand for food by using wheat and rice. I can assume that people are meeting their food requirements while using the combination of wheat and rice. If I consider that wheat and rice are complement then what will happen is that if the price of wheat increases then at the same time it might be possible there is decrease in consumption of rice. So prices of substitutes and price of compliment has some role in the determination of the demand for food. So if I consider that wheat and rice are substitutes then what will happen is that if the price of wheat increases then what will the consumer do? It might be possible that the consumer increases the use of rice to meet its food requirement. So the demand has some role in the determination of the demand for that particular commodity. Then in the same pattern if we talk about the taste and preferences of the consumer if there is some change in taste and preferences of the consumer again there is change in demand, there is a shift in demand curve from one position to another position. Now to understand all these concepts if we assume a demand equation, why is there a equation here? Q is equal to gamma minus alpha p plus beta i. You have Greek notations, what is the first notation? Gamma. The notation with p is called alpha and with income which we denote with i what carries particular equation? The letter attached to it is called beta and what are these? These are the parameters of any demand equation. And what is this? It basically depicts an association that what is the association between demand and price and income of a commodity. If we assume that if this is demand function for beef, if price of beef increases there is a decrease in demand for beef. But at the same time if I assume that beef is a normal commodity, you will remember when we discussed consumer behavior in consumer theory that it might be possible a commodity under consideration is a normal commodity. A commodity under consideration is an inferior commodity. Then depending upon the nature of the commodity, if income increases for normal commodity there is increase in demand for that particular commodity. This equation basically reports me that demand for beef and income are positively associated. So in this case what is beef? We consider beef is a normal commodity. If there is increase or decrease in demand and there is no change in the association among variables, the values of gamma, alpha and beta remains constant then what we will say is that this is basically association between the variables at a particular point in time. But when we talk about dynamic aspects then this association between price and quantity demand will change. And when association between price and quantity demand change, value of estimated value of alpha will change. It might be possible that instantaneous adjustment because of increase in price is something like this. If price of beef is increased by 100 rupees, it might be possible demand for beef decreased by 2 kg. But over a longer period of time, what we assumed at this particular moment is that if price increases by 100 rupees, demand for beef will decrease by 2 kg. But under dynamic side it might be possible there is a change in association between these two variables. First we talked about 2 kg change. It might be possible that there is a change in 3 kg because of increase in price of beef by 100 rupees. When alpha, beta it might be possible that the values of alpha, beta and gamma changes. And when values of alpha, beta and gamma changes it is referred to as structural change in demand. It might be possible. We are considering that this is a linear association. Price will increase, quantity demand will increase in a particular way. But it might be possible there is change in functional form. It might be possible there is a nonlinear association among variables. So if there is change in the nature of the association among variables, then again there are some structural changes in the economy. In this diagram we are basically making discussion about demand for beef in 2 time periods. If we make a comparison of demand for beef in 1973 with demand for beef in 2023 we observed there is a decrease in demand for beef. This decrease in demand is attributed to the change in preferences of the consumer and preference, change in the preference of the consumer. As long as if we assume there is no change in the consumer preferences, then there will be no change in demand for commodity. There is no shift of the demand curve from one position to another position. But what happened here is demand for beef decreased in 2 time periods. It might be possible that there are some negative consequences on the health of the people. There are certain content that is contributing negatively towards the health of the people. If you use beef, there are some negative impacts on your health, you have a heart problem, your blood pressure is shooting, then because of that awareness historically what happened? In developed economies there is a decrease in demand for beef and this decrease in demand for beef that is because of structural change and that structural change is observed because of changing behavior of the consumer and that change in behavior of the consumer is because of awareness. Now if I talk about this diagram in this video, then here we are taking quantity, demand for fruits and if I talk about demand for fruits reference, demand for fruits in year 1973 is less as compared to demand for fruits in year 2023. Here we are observing that over a period of time there is increase in demand for fruits. What is the reason for this? The demand for fruits has increased in the market. It might be possible this increase in demand for fruits is because of the awareness of the consumer again, fruits are contributing positively towards the health of the consumer. So because of that increase in awareness, what we are saying is that there is increase in demand for fruits. The consumers are willing to buy more commodity, more quantity of fruits at same price in two time periods. When you saw the demand for fruits, we observed that there is increase in demand for fruits over two time periods. If we talk about this in some other quantity reference, let's take another agricultural commodity which is exposed pulses. In two time periods, here we are seeing that there is decrease in demand for pulses in two time periods. And one thing that should be clear to you people is that when we say demand increases, demand curve will shift, right world. When we say demand decreases, demand curve will shift, left world. Then one more thing which is very important is that in demand, we mostly talk about price and quantity association. But we also put a variable income in that model. Now what is the impact of income? When you talk about income, mostly income contributes positively towards the demand for a commodity. If income increases, quantity demand increases, then we say quantity under consideration is a normal commodity. But one thing that is very important here is that whenever income increases, quantity demand increases at a decreasing rate. What is this that we have made a curve relationship and what is this that we are indicating? That although income of the household increases, but there is increase in quantity demand at a decreasing rate. What is the demand I am defining here with reference to income? Beef. My assumption is that in developing countries beef act as a normal commodity. Keeping other things constant. If income increases, there is increase in demand for beef. If I go into developed economies, it might be possible that the association becomes negative. If income increases, demand for beef decreases. If all these concepts are defined precisely, then I think that is important whenever we make discussion about market demand for agricultural products. It is the price of complement and price of substitutes. And availability of different substitutes in the market with reference to commodity under consideration. If we talk about if there is increase in price of complement, then because of increase in price of complement, there is a decrease in demand for commodity under consideration. As we just talked about, if I say wheat and rice complement, people use wheat and rice and use a combination of wheat and rice to meet their food requirement. If the price of wheat increases, what will happen? It might be possible there is a decrease in demand for rice. Why? Because of my assumption, wheat and rice are complement of each other. You can also take an example that if I talk about cereal and quantity of milk, that if price of cereal increases, then demand for milk will decrease. People are using cereal and milk for their breakfast. If the price of cereal increases, people will also decrease the consumption of milk. Now, if I talk about substitutes in reference to this, then what will happen? If the price of substitutes increases, then demand for substitutes will also increase. Let's talk about beef and chicken. What is my assumption? Both commodities are substitutes of each other. If the price of beef increases, it might be possible. If chicken is a substitute, the demand for chicken will increase. In case of complement, in case of substitute, price and quantity both move in the same direction. When we talk about the development of new products, whenever new product is developed, it will increase the demand in shift in demand of existing commodity. We observed with the passage of time, there is development of the artificial fiber and because of that artificial fiber, it substituted your cotton. Existence of the substitute results in decrease in demand for wool and at the same time, the change in preferences also contributes towards the shift in demand. So, all these factors are the factors which will affect the demand of agricultural products in the market. Thank you very much.